Basis of EPA Decision on Ethanol Waiver

Cindy Zimmerman

The bottom line for the Environmental Protection Agency when it came to making a decision on the request for a partial waiver of the Renewable Fuels Standard was the impact within the next year.

EPAAccording to EPA, “implementation of the RFS would have no significant impact in the relevant time frame (the 2008/2009 corn season), and the most likely result is that a waiver would have no impact on ethanol production volumes in the relevant time frame, and therefore no impact on corn, food, or fuel prices.”

EPA also determined that the evidence also indicates that even if the RFS mandate were to have an impact on the economy during the 2008/2009 corn marketing year, it would not be of a nature or magnitude that could be characterized as severe. Even in the modeled scenarios where a waiver of the RFS mandate might reduce the production of ethanol, the resulting decrease in corn prices is anticipated to be small (on average $0.30 per bushel of corn), and there would be an accompanying small increase in the price of fuel (on average $0.01 per gallon in fuel costs). The average increase in corn prices in all modeled scenarios, including scenarios where the RFS mandate would and would not have an impact, was $0.07 per bushel of corn. Such levels of potential impacts from the RFS program do not satisfy the high threshold of harm to the economy to be considered severe.

Read EPA’s decision justification here.

corn, Ethanol, Food prices, Government, News

Ethanol Industry Pleased with EPA Decision

Cindy Zimmerman

Reaction from the ethanol industry started coming out just minutes after the Environmental Protection Agency announced it would deny a request to cut the Renewable Fuels Standard.

RFARenewable Fuels Association President Bob Dinneen calls the decision “an important victory for all Americans.”

“Today’s EPA decision recognizes the importance of biofuels to the American economy,” Dinneen said in a statement. “The Renewable Fuels Standard is critical to our nation’s goals of reducing oil imports, addressing environmental challenges and developing the promising next generation of biofuels from cellulosic feedstocks.”

POETPOET, the world’s largest ethanol producer, praised the EPA ruling.

“For months, special interest groups seeking to defend the energy status quo have attempted to lay all of the blame for rising food costs at the feet of the ethanol industry,” said Rob Skjonsberg, Vice President of Government Affairs for POET. “But the fact of the matter is that virtually every independent study has shown that ethanol’s impact on food prices is minimal while its impact on lowering gas prices is substantial.”

Iowa Renewable Fuels Association executive director Monte Shaw noted the recent 20 percent drop in the price of corn and said “right now ethanol producers are making more ethanol than ever, and yet the price of corn has gone down. It should be obvious that the argument that ethanol and biofuels causes higher prices has little merit.”

NBBThe biodiesel industry is also pleased with the ruling. National Biodiesel Board CEO Joe Jobe said, “It is important to note that all renewable fuels qualify for the current RFS. In fact, if the RFS is waived or cut in half in 2008, then the growth of all biofuels, including “advanced biofuels” such as biodiesel, would be severely hindered.”

Biodiesel, Ethanol, Government, News, RFA

EPA Denies Ethanol Waiver Request

Cindy Zimmerman

EPAThe Environmental Protection Agency announced Thursday that it would deny a request by Texas Governor Rick Perry to reduce the Renewable Fuels Standard.

EPA Administrator Stephen Johnson says they carefully considered the more than 15,000 comments on the issue and found that “the RFS is not causing economic harm but is strengthening our nation’s energy security and supporting American farming communities.”

Ethanol, Government, News

Cutting Ethanol Production Would Increase Gas Prices

Cindy Zimmerman

In advance of EPA’s decision to be announced today on the requested partial waiver of the Renewable Fuels Standard, the Consumer Federation of America (CFA) is warning that cutting ethanol production will increase gasoline prices “substantially.”

The comments were filed in response to a study prepared for the state of Texas by Phillip K. Verleger and Darrel B. Chodorow who erroneously claim increasing demand for gasoline and crude oil would lower prices.

Consumer Federation of America“The suggestion that increasing demand will lower oil and gasoline prices is not only contrary to Economics 101 and what independent analyses by Wall Street firms, government agencies, and academic institutions have concluded,” said Dr. Mark Cooper, CFA’s Director of Research, “but the study’s authors do not provide one shred of evidence to support their strange argument.”

Cooper says independent studies indicate that a reduction in ethanol production would increase the price of gasoline by almost 50 cents a gallon.

“We looked at the movement of refinery output, imports, exports and inventories, as well as recent price changes and could find no evidence that the market is or would behave in the bizarre, counterintuitive way that the Texas theory predicts,” Cooper concluded. “It is critical that the EPA base its decision on the waiver request on a proper understanding of how current energy markets work in the real world.”

Ethanol, News

West Va. Buses Running on Biodiesel

John Davis

The first company to make biodiesel in West Virginia is now helping fuel school buses in the state.

This article from the Charleston (WV) Gazette says the green fuel is running nearly 1,800 buses in 25 counties in the state:

West Virginia’s first biodiesel manufacturer is helping supply several West Virginia county school systems with the renewable fuel for their school buses, Gov. Joe Manchin announced today.

“We are proud to provide a clean, renewable fuel that lessens our dependency on foreign sources of oil,” Dean Cordle, executive vice president of the Nitro-based AC&S Inc., said in a news release. “Becoming the first commercial renewable fuel production facility in West Virginia is an honor of AC&S.”

AC&S, a chemical manufacturer that began in 1986, began making biodiesel at their facility this year and can produce up to 3 million gallons a year.

Most of the blends used are B5.

Biodiesel

Corn Price Relief Good News for Ethanol Makers

John Davis

Ethanol makers, who have been having a tough time making ends meet as their primary feedstock skyrocketed in price, are finally seeing some relief in lower prices… and better bottom lines.

This Aberdeen (SD) American News article posted on the Chicago Tribune web site has details:

The industry, which buys corn to make ethanol, has been finding it tough to make even a tiny profit, said ethanol consultant Mark Luitjens of Aberdeen, who has been part of the industry since 1992.

“For the past few months, the plants have struggled, and some have had negative (profit) margins,” he said. “Today, with the current cash price of corn and the price of ethanol, the plants are very close to breaking even or making a little money.”

Corn’s cash price was $5.21 a bushel late last month in Aberdeen. In late June and early July, it surpassed $7. Ten years ago it was $1.50, the lowest it had been since the 10 years before. The average for the past 15 years is $2.25 to $2.35, Luitjens said.

“Then the past couple of years it just went wild.”

Now it’s taming down. The futures price is $2.20 a bushel less than it was three weeks ago, [Nathan Schock of Poet, a Sioux Falls-based ethanol enterprise] said.

The story also says that much of the rise in corn prices has been fueled by speculators… and not any real supply-and-demand factors. Those in the ethanol industry are hopeful that speculation is over and real market forces, such as the expected large corn crop this year, will help keep corn prices in a range where farmers and refiners can make some money.

Ethanol, News

Georgia Researchers Increasing Ethanol Yields

John Davis

A group of researchers from the University of Georgia are working on technology to get more ethanol from non-food sources, such as biomass.

This story from ChemicalOnline.com says they’re finding a way to make ethanol out of bermuda grass, switch grass, napier grass and even lawn clippings cleaner than previous biomass ethanol efforts:

“Producing ethanol from renewable biomass sources such as grasses is desirable because they are potentially available in large quantities,” said Joy Peterson, professor of microbiology and chair of UGA’s Bioenergy Task Force. “Optimizing the breakdown of the plant fibers is critical to production of liquid transportation fuel via fermentation.” Peterson developed the new technology with former UGA microbiology student Sarah Kate Brandon, and Mark Eiteman, professor of biological and agricultural engineering.

The new technology features a fast, mild, acid-free pretreatment process that increases by at least 10 times the amount of simple sugars released from inexpensive biomass for conversion to ethanol. The technology effectively eliminates the use of expensive and environmentally unsafe chemicals currently used to pretreat biomass.

The article goes on to point out that making ethanol from non-food sources not only relieves any pressure from the food supply, but it also makes areas not-as-friendly to agriculture potential fields for the green fuel.

biomass, Ethanol, News

EPA To Announce Ethanol Waiver Decision

Cindy Zimmerman

EPAThe highly-anticipated decision by the Environmental Protection Agency on whether to grant a partial waiver of the Renewable Fuels Standard will be announced Thursday afternoon.

EPA Administrator Stephen Johnson and Principal Deputy Assistant Administrator Robert Meyers will hold a press conference at noon central time to officially answer the request from Texas Governor Rick Perry to cut the RFS ethanol blending requirements by 50 percent. EPA received so many public comments on the issue that they had to postpone announcing a decision past the required 90 days after the request was made. The decision was supposed to be made by July 24.

Ethanol, Government, News

E85 Station Opens in Concord, California

Pearson FuelsPearson Fuels has opened their third E85 station in the state of California. The Chevron station is located at 1001 Willow Pass Court in Concord.

This new travel facility features a brand new Convenience Store and is the first public E85 station in Northern California. It is located directly off of Route 4 at Willow Pass Court and open 24 hours a day.

The first alternative fuel station was opened in San Diego, California by Pearson Fuels in 2003. It carried E85, biodiesel, low sulphur diesel, compressed natural gas, propane, and it hosted electric charging for vehicles in need. Many called this station, “The Fuel Station of the Future”.

“There are a lot of chickens running around,” or cars that can run on ethanol, Mike Lewis, owner of Pearson fuels once said. “And now we just need to make the eggs. I think we have the right product at the right time with the right business model. The potential upside is massive.”

Besides locations in San Diego and now in Concord, Pearson Fuels has an E85 site in Bressi Ranch. Currently, there are a total of nine E85 stations in the state of California.

Biodiesel, E85, Ethanol, Facilities, News

New Cellulosic Ethanol Partnership

Cindy Zimmerman

VereniumBP and Verenium Corporation have announced the creation of a strategic partnership to accelerate the development and commercialization of cellulosic ethanol.

BPAccording to a Verenium press release, the partnership “combines a broad technology platform and operational capabilities in an effort to advance the development of a portfolio of low-cost, environmentally sound cellulosic ethanol production facilities in the United States, and potentially throughout the world.”

Under the initial phase of the alliance, Verenium will receive $90 million in funding from BP over the next 18 months for rights to technology within the partnership.

“BP is very pleased to be entering this important relationship with Verenium. We believe energy crops like sugar cane, miscanthus and energy cane are the best feedstocks to deliver economic, sustainable and scaleable biofuels to the world. This deal puts us at the front of the cellulosic biofuels game,” said Sue Ellerbusch, president of BP Biofuels North America.

Cellulosic, Ethanol, News